Have you recently installed any Security Programs that are blocking ActiveX?
Are you going to Windows Update as an Administrator User?
General troubleshooting for scripting errors
IE6 and activex not working...
thread779-562413
Add the following domain names to the Trusted Sites Zone:
How to Reinstall or Repair Internet Explorer and Outlook Express in Windows XP (Q318378)
You can reinstall IE in Windows XP by clicking Start, Run and entering the following command:
rundll32.exe setupapi,InstallHinfSection DefaultInstall 132 c:\windows\inf\ie.inf
(where c: is your Windows drive).
You will need to have your XP CD available. If you re-install remember to update it.
Using SFC /Scannow at the command prompt will help in repairing IE.
Repairing windows itself by running it over itself. You will lose all your windows updates but your files will be untouched.
How to Perform an In-Place Upgrade (Reinstallation) of Windows XP (Q315341)
Some general things to try.
See if System Restore will get you back to a restore point before your problem with Windows Update.
Try Safe Mode (with Networking).